Appeal from the United States District Court for the Southern District of Illinois. No. 84 C 3067 -- James L. Foreman, Judge.

Author: Flaum

Before CUMMINGS, Chief Judge, BAUER, and FLAUM, Circuit Judges.

FLAUM, Circuit Judge.

This case presents an issue of first impression for this court concerning a union's duty of fair representation. The plaintiff here sued his union and employer two years after a change of employers resulted in a loss of his seniority rights. The district court ruled that under the Supreme Court's decision in DelCostello v. Teamsters, 462 U.S. 151, 76 L. Ed. 2d 476, 103 S. Ct. 2281 (1983), the plaintiff's complaint had not been timely filed within the six-month statute of limitations. The plaintiff argued that under Clayton v. UAW, 451 U.S. 679, 101 S. Ct. 2088, 68 L. Ed. 2d 538 (1981), the exhaustion of internal union remedies was normally a prerequisite to a duty of fair representation suit and that in this case, since exhaustion was required and pursued, the statute of limitations was tolled. The district court found that the plaintiff's exhaustion of internal remedies was "futile" and thus would be excused under the "futility" exception recognized in Clayton. The district court held that when exhaustion is not required under Clayton, there is no reason to postpone the litigation, and therefore the statute of limitations was not tolled.

We reconcile these two Supreme Court doctrines in favor of exhaustion of intra-union remedies and reverse and remand the district court's holding for the union and the railroad-employer.

I

In March 1982, the defendant Missouri Pacific Railroad Company ("MOPAC") received approval from the Interstate Commerce Commission to purchase approximately seventy miles of railroad track between Pana and Mitchell, Illinois that the Consolidated Rail Corporation ("Conrail") was abandoning.*fn1 The nine Conrail employees, including the plaintiff H. Jack Frandsen, who worked on this stretch of railroad, were represented by the Brotherhood of Railway, Airline and Steamship Clerks, Freight Handlers, Express and Station Employees ("BRAC"). BRAC also represented 195 MOPAC employees in that company's St. Louis Terminal District 24, into which the Conrail line was to be merged.

H. Jack Frandsen has been a railroad employee and member of the defendant union BRAC since 1944. In 1982 he was working as a signal-block operator in Mitchell, Illinois for Conrail. Because of his thirty-eight years of seniority with Conrail, Frandsen had the right to remain employed by Conrail by "bumping" into other positions at Conrail occupied by employees with less seniority. Under traditional BRAC practices, Frandsen could also choose to keep his old job, but work for the new employer, MOPAC, who purchased the section of track he worked on. Accordingly, BRAC entered into negotiations with MOPAC, which culminated in an agreement on April 15, 1982 that offered the nine Conrail employees, including Frandsen, employment with MOPAC. The Agreement provided that the Conrail employees accepting MOPAC's employment offer were to have "prior rights" to their current positions,*fn2 which meant that they would receive a MOPAC seniority date of April 16, 1982, which gave them the option of displacing any employee who was hired after that date.

But at the time Frandsen had to make a choice, this agreement was not yet finalized. In exercising his choice of whether to stay with the same employer in a new job or to stay in his old job with a new employer, seniority considerations were crucial for Frandsen, because if he left Conrail to work for MOPAC without "dovetailing" protection, he would forfeit all of the seniority rights that he had accumulated at Conrail.*fn3 Frandsen had heard that MOPAC proposed to allow dovetailing, and this understanding was supported by Al Archual, the BRAC General Chairman for Conrail. Yet it was not until the night of April 15, 1982, just before he had to choose whether to switch employers or switch jobs, that plaintiff was allegedly assured by the local MOPAC Chairman, R. L. Teahan, that an agreement providing for dovetailing had been adopted.

The next day, after Frandsen had chosen to go with MOPAC, he found out that rather than being "dovetailed" by the Agreement, he would be "endtailed": his seniority would begin that day, April 16, 1982, so that he would have less seniority than the most junior MOPAC employee.*fn4

On May 10, 1982, five of the transferred Conrail employees, including Frandsen, appealed to BRAC President R.I. Kilroy and protested the terms of the April 15 Agreement. Subsequently, believing that Kilroy was delaying a decision on the appeal, the five former Conrail employees wrote to him on July 12 and again on July 19, 1982, indicating that they were prepared to file a lawsuit if necessary. On the same day, July 19, 1982, Frandsen reviewed a letter from Kilroy to Frandsen's Local Chairman Robert L. Teahan, which distinguished the internal union appeal procedures for protesting the manner in which a grievance was handled from those procedures required to achieve a change in a negotiated collective bargaining agreement. By the next day, two of the five, but not Frandsen, had retained counsel.

Kilroy did not directly respond to their appeal until August 25, 1982, when he held that the April 15 Agreement was fair under the circumstances and complied with the intent and the purpose of the BRAC Constitution. Frandsen appealed that decision to BRAC's International Executive Council on September 3, 1982. By October 11, 1982 Frandsen felt that his appeal was not being ruled on promptly and wrote to the Secretary of BRAC's Executive Council to protest the delay. In that letter Frandsen stated that he had "reviewed the Constitution of the Grand Lodge and [was] aware that certain appellate procedures must be followed before outside action was taken. However, in the event irreparable harm may occur . . . as a consequences of the slowness of the appeal procedure built into the International Constitution, it is possible that other action may be necessary."

No union officer at any time directly sought to correct Frandsen's misconception that intra-union exhaustion was required, and it was not until September 23, 1983, eleven months after Frandsen filed his appeal to the Executive Council and more than ten months following his letter to the Secretary implying that he might be forced to take "outside action," that the Executive Council voted to sustain President Kilroy's decision.

On March 7, 1984, less than six months from the formal ruling of the Union's International Executive Council, Frandsen filed this action. In his complaint Frandsen alleged that BRAC, BRAC's General Chairman for MOPAC, T.W. Taggart, Jr., and BRAC's International President, R.I. Kilroy, had breached the duty of fair representation they owed to him by negotiating an agreement that deprived him of almost forty years of seniority. Frandsen further ...

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